Category: The Income Problem

Across the western world and beyond, the political status quo is crumbling. In response to the effects of automation and globalisation on the sufficiency and security of labour and incomes, and in the light of clear, blatant, and unambiguous unfairness in our political economic system, voters are revolting. Electorates in nation after nation, in election after election, are abandoning traditional ideologies, loyalties and political parties in favour of new radicals, revolutionaries, nationalists and populists from both the Left and the Right. Sometimes it seems like their policies are from both Right and Left.

“My whole life is about winning. I don’t lose often. I almost never lose.” – Donald Trump, 2016 GOP Presidential Nominee

In the UK the narrowness of the Scottish independence defeat was a surprise, the popularity and rise of Jeremy Corbyn to the leadership of the British Labour Party has been a surprise and, of course, the loss of the Brexit referendum was a surprise. In France it’s Marine Le Pen, in Iceland the Pirate Party, in Spain Podemos. In the United States, of course, there is Bernie Sanders and Donald Trump. Everywhere the barbarians are at the gate, and the comfortable classes (and media) are surprised. After all, their theories say things aren’t so bad.

But to many ordinary people – to voters – struggling to pay their rent, or their car insurance, or their utility bills – for the Amazon packers, the Uber drivers, the so-called freelancers and contractors of the Gig economy, and for the ones left behind when manufacturing moved on – for them it wasn’t a surprise. Their political anger, cynicism and sense of injustice is palpable. And since many see themselves as having nothing to lose, they are more and more willing to take political risks. Every country is seeing challenges to the intolerable economic stress, insecurity and unfairness of the Way Things Are. As Pope Francis spells out: “We are faced… with one complex crisis which is both social and environmental. We want change – real change, structural change. This system is by now intolerable”.

When the people are suffering and their politicians ignore them or are ineffective in relieving that suffering, there is a political vacuum. Voters who are unrepresented by existing politicians will seek new ones – it’s as simple as that. And the unscrupulous, self-interested and power-hungry will seek to fill that vacuum and meet that demand in whatever way they can – including relying on the corrosive division of identity politics.

We’re already seeing this across the western world and beyond, as growing income stress and insecurity result in populist political challenges and political (and ideological) instability. And as the pain and the blatant and self-evident unfairness grows, so too will this political pressure.

Long before the 1% own it all, in some major country there will be the election either of a disastrous, conflict-causing leader, or of a pragmatic revolutionary agent of positive change. Either the problem will be solved, or change will happen – there is no middle ground any more. And that major country, whichever is the first to take that leap, will be an example – either a horrific example or a shining example – to the entire world.

Brexit may be that example, or maybe Trump will be. Or perhaps it will be France and Marine Le Pen. Or maybe it’ll be Jeremy Corbyn, or somebody who rises in his reinvention of the British Labour party. It’s too early to tell. But until individual economic stress and insecurity are alleviated it’s only a matter of when.

But how can economic stress and insecurity be alleviated without restricting the technology and globalisation that’s causing it? If you don’t now the answer to this, then you’re not paying attention to important economic experiments planned or underway in Canada, Finland, the Netherlands, New Zealand and elsewhere.

Simply put, the answer to Donald Trump, Bernie Sanders, Brexit, Front Nationale, Jeremy Corbyn and all the other challengers is a Basic Income.

The rise of Donald Trump to credibly contest for the presidency of the United States is not a phenomenon – it’s the symptom of a phenomenon. Other symptoms include Brexit and the rise of Jeremy Corbyn, Geert Wilders, Podemos, the Austrian Freedom Party, Syriza, Five Star, the Icelandic Pirates, and many others across the western world and beyond. In election after election and in nation after nation we are witnessing an ongoing and growing political revolution.

“I would build a great wall, and nobody builds walls better than me”. – Donald Trump

The phenomenon behind this revolution is the devaluation and destabilisation of labour by automation, the internet, outsourcing, offshoring and financialisation – in other words, the devaluation of labour by technology and globalisation. As technology and globalisation concentrate income and capital in the wealthy, developed west the majority is experiencing rising core, unavoidable costs (especially housing), while incomes have stagnated. The result is mass and increasing personal economic stress and insecurity. The political revolution we are witnessing across the western world isn’t ideological – it’s personal.

The median income here in Ireland is about €340 a week. In the UK it’s around £300 a week. In Germany it’s about €400 a week. * Try paying rent, electricity, waste collection, phone, internet, car tax, insurance, property tax and all the rest from that – and that’s before groceries, clothes, household necessities, etc. And don’t even think about a doctor’s visit, or a sick pet, or a car breakdown. When you live on the median income every emergency is also a financial emergency. Christmas is a nightmare.

That’s half the population of some of the richest countries in the world with some of the most generous social welfare systems in the world. It’s much worse elsewhere – especially in the US, with a median income about $550/wk and far fewer public services. Of course, many people above the median income are struggling too – and many more have a loved one who is struggling. Together, they are the majority.

And this majority is not represented in either politics or media. A large part of the reason for this is that high salaries of politicians and popular media personalities. When you watch a TV political discussion you’re usually listening to a couple of 200Ks, a 150K and maybe a few 100Ks moderated by a 500K in countries with median incomes of only of 15K – 25K. Even the almost exclusive use of the ‘average’ (i.e. the mean) to represent wage and income figures distorts public discussion to make things seem better than they are (because the mean is skewed upwards by higher earners). You almost never hear about median incomes and wages – the incomes and wages half the population actually live on.

Skewed and out of touch coverage and discussion from the bubble of the ‘mainstream media’, combined with the secure, comfortable lives of themselves and their loved ones, is why so many established, ‘status quo’ politicians just don’t get it. They just don’t see an emergency, while more and more of their constituents live in a constant state of emergency. They think small, incremental improvements are enough, and that risks are not necessary. At best they seem useless.

And there’s is the sheer, blatant, clear, obvious and very unfair injustice that the struggling majority see all around them. The bank bailouts, the too-big-to-jail bank criminals, the tax avoidance, the revolving door between government and Goldman Sachs, the corporate subsidies, and all the rest. Again, politicians seem useless in the face of global corporate and financial power. For growing numbers of people it is no longer their system. It is no longer their government.

Essentially, there is a political vacuum. There is a vast and growing political need, and no sign of governing politicians even recognising that need, never mind meaningfully addressing it. Every mainstream political choice seems to be between the lesser of two evils. Not only is there no coherent plan to practically address the people’s pain – there’s not even a coherent theory, idea or ideology within which to frame such a plan. The ship is on the rocks and the water is pouring in below decks, while the fat and comfortable captains fuss about details.

Into this political vacuum has poured two kinds of challengers – ‘Us vs Them’ haters on one side, and rusty Marxist types on the other. Either would be an economic disaster in the real, practical world – as Brexit is. Whatever the solution to the income problem is, it must involve both the market freedom that makes our abundance possible, and the absolute personal and social security and opportunity that makes meaningful social (and market) access possible. After all, it’s hardly a free market if, under threat of homelessness, the only thing you have to sell is minimum wage labour.

The labour effects of technology and globalisation are accelerating, and the losers are beginning to outnumber the winners. Financial disaster continues to threaten as the austerity from the last crisis continues. Growth remains weak despite negligible interest rates. And many hundreds of millions of people continue to lurch from financial disaster to financial disaster with no hope for their future in an unfair system. The present situation is intolerable to far too many, and so it will change. Trump is just one of the options.
* Note: To their great credit the OECD is now requiring and publishing median income figures for member states, which is where these median income figures come from. See http://stats.oecd.org/Index.aspx?DataSetCode=IDD for more.

You don’t get more middle class than the median income. That’s the income at which half the country makes more and half make less. Median income is a better reflection of the lives of most people than average income, with which it is often confused. This is because the average income is skewed by the spectacular earnings of those at the very top, which forces it higher. Most people don’t make near the average income, but the median income is right in the middle. 50% of people make more than the median income and 50% make less. You can’t get any nearer to the middle. Continue reading “Meet the Median Family”